SAN FRANCISCO (CBS SF) – The California Public Utilities Commission has fined Pacific Gas and Electric Company $1.05 million and shareholders could pay hundreds of millions more over improper email communications between the utility and state regulators.

PG&E said in a statement it will appeal the decision, claiming the CPUC may have overstepped its authority and has not taken into account corrective actions already taken by the utility.

The decision stems from the disclosure of several emails earlier this year between a PG&E executive and CPUC officials, as the two sides appeared to be negotiating which judge would be appointed to a hearing on utility rates in the San Bruno pipeline explosion case.

CPUC rules prohibit utilities from sending private messages to the commission over the selection of administrative law judges.

The emails were sent by since-fired PG&E executive Brian Cherry in January to CPUC Commissioners Michael Peevey and Michel Florio, and to Peevey’s former chief of staff, Carol Brown. When the messages were disclosed in September, PG&E fired Cherry and two other executives and Brown was removed as Peevey’s top aide, though she is still with the CPUC.

Only three of the commission’s five members voted on the sanctions Thursday, with Peevey and Florio recusing themselves.

In addition to the fine, PG&E shareholders will be required to absorb the cost of rate impacts to customers because of the delay in the case, an amount that could be up to $400 million. The exact amount will be determined by the commission after the rate setting case concludes.

In a statement, a PG&E spokeman said the utility understands it is fully accountable and has already taken corrective measures following its own voluntary reporting of the inappropriate emails.

However, the spokesman says the CPUC’s decision doesn’t appropriately take account of these corrective actions, which included firing three executives and creating a new role of chief regulatory compliance officer. “[The CPUC] imposes sanctions that aren’t warranted and that may go beyond the CPUC’s legal authority. As a result, we will appeal the decision.”

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